State Of New Mexico, Ex Rel., King v. B&B Investment Group, Inc.

329 P.3d 658 (2014)

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Nature of the Case

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Facts

Ds market, offer, and originate high-interest, small-principal loans that they call 'signature loans.' Signature loans are unsecured loans which require only the signature of the borrower, along with verification of employment, home address, identity, and references. Borrowers take out loans of $50 to $300 in principle, which are scheduled for repayment in biweekly installments over a year. Signature loans carry APRs between 1,147.14 and 1,500 percent. Ds extend signature loans to the working poor; they lend exclusively to people who provide proof of steady employment but who, by definition, are either unbanked or underbanked. These borrowers are highly likely to live in poverty. Mr. Wellito borrowed $100 from Defendants. His loan carried a 1,147.14 APR and required repayment in twenty-six biweekly installments of $40.16 with a final payment of $55.34. Thus, the $100 loan carried a total finance charge of $999.71. After borrowers brought complaints to the Attorney General, P sued Ds under the UPA, which prohibits 'unfair or deceptive trade practices and unconscionable trade practices in the conduct of any trade or commerce.' Unconscionable trade practices are defined in relevant part as an 'extension of credit . . . that to a person's detriment: (1) takes advantage of the lack of knowledge, ability, experience or capacity of a person to a grossly unfair degree; or (2) results in a gross disparity between the value received by a person and the price paid.' The district court correspondingly found that the loans were not substantively unconscionable, but they were procedurally unconscionable under common law. Both parties appealed.